Define: Fiduciary Relationship

A fiduciary relationship is a legal relationship in which one party, known as the fiduciary, owes a duty of trust, loyalty, and good faith to another party, known as the beneficiary or principal. The fiduciary relationship is characterised by a high standard of care, requiring the fiduciary to act in the best interests of the beneficiary and to avoid conflicts of interest. Fiduciary relationships can arise in various contexts, including trustee and beneficiary relationships, attorney-client relationships, executor and heir relationships, corporate officer and shareholder relationships, and agent and principal relationships. Examples of fiduciary duties may include the duty of loyalty (to act solely in the beneficiary’s interests), the duty of care (to exercise reasonable skill and diligence), the duty of confidentiality, and the duty to avoid self-dealing or conflicts of interest. Breach of fiduciary duty can result in legal consequences, including liability for damages, disgorgement of profits, and other remedies. Fiduciary relationships play a critical role in many aspects of law and commerce, ensuring trust and accountability between parties with unequal power or reliance on each other.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.